New Dangote Deal Could Save Nigeria $14.3 Billion Annually on Petrol Imports
A new partnership with the Dangote Refinery has the potential to save Nigeria up to N24 trillion ($14.3 billion) annually by reducing its reliance on expensive petrol imports. For decades, Nigeria has spent approximately $15 billion each year importing fuel to meet domestic demand. However, recent agreements between the Nigerian National Petroleum Corporation (NNPC), Dangote Refinery, and independent oil marketers aim to shift Nigeria toward local production, cutting import costs and potentially stabilizing fuel prices for consumers.
Despite the start of petrol production at the Dangote Refinery in September 2024, Nigeria’s petrol imports surged in October. According to the Organization of the Petroleum Exporting Countries (OPEC), Nigeria imported 1.5 million metric tonnes of petrol and 414,018 metric tonnes of diesel in just over a month, valued at nearly $1.9 billion (approximately N3 trillion). This was a significant rise from previous months, even though fuel imports were 60% lower than the same period in 2023. Importation remained high as fuel retailers experienced disputes with Dangote’s refinery.
The OPEC Monthly Oil Market Report indicated that most of the imported fuel came from Europe, with gasoline exports to West Africa increasing as a result of reduced shipments to the United States. Despite this, the agreements with Dangote’s refinery are expected to bring long-term benefits, reducing dependency on foreign suppliers and stabilizing the fuel market.
Energy experts, including Faith Nwadishi, argue that the switch to domestic fuel sourcing could be a game-changer for Nigeria’s economy. “If we begin to buy products from Dangote, we will save at least N24 trillion ($14.3 billion) yearly,” Nwadishi stated. “This would ease economic hardship and reduce the logistical costs that fuel the country’s supply chain.”
Energy entrepreneur David Etim echoed this sentiment, emphasizing that achieving energy self-sufficiency is critical to national security. “No country can call itself truly independent while depending on outsiders for such an essential resource,” Etim noted. He believes that Nigeria’s move toward energy independence marks a positive step in securing its economic future.
Currently, high fuel prices remain a burden for Nigerians, with some paying more than N1,200 per litre ($0.71). Business owners like Felix Chukwuemeka are feeling the pinch, noting that transportation costs have doubled in recent months. “If the price of petrol can be reduced, it will boost our businesses,” said Chukwuemeka, who is eager for relief.
However, concerns remain about the sustainability of these reforms, especially as Nigeria’s four refineries remain inactive. Senior economist Paul Alaje warned that without revitalizing domestic refineries and addressing currency volatility, achieving stable fuel prices may be challenging. “The exchange rate remains a huge obstacle. The more we neglect our refineries, the more we incur sunk costs,” Alaje said.
While the new agreements offer hope for cheaper, locally sourced petrol, experts stress that implementation must be transparent and closely monitored to ensure long-term success. For now, the impact on fuel prices has yet to be felt, but if these initiatives succeed, they could mark a major shift toward energy independence, reduced fuel costs, and economic growth for Nigeria.
